NEW YORK (AP) — Struggling lender CIT Group Inc. warned Monday that it might still have to file for bankruptcy protection even if it completes a revised debt restructuring plan.
Billionaire investor Carl Icahn sent a letter to CIT Group’s board, offering to underwrite a $6 billion loan he says would save the lender $150 million, according a report in the Wall Street Journal. A spokesman for CIT Group wasn’t immediately available for comemnt.
Shares of CIT Group jumped 21 cents, or 18.8 percent, to $1.33 in early morning trading Monday amid reports about Icahn’s offer.
The New York-based lender to small and mid-sized businesses is trying to cut its near-term debt burden by $5.7 billion. On Friday, it sweetened an exchange offer to current bondholders as it tries to ensure the offer’s success.
The revised exchange offer from CIT Group gives bondholders a better interest rate and shorter maturities on the new debt. It also opens up the exchange to investors holding bonds that mature after 2018.
The revised exchange offer would give the government — which has already provided CIT Group $2.3 billion in aid — a bigger stake in the lender.
At the same time as it tries to swap current debt, CIT Group is asking bondholders to approve a prepackaged reorganization plan should it need to file for bankruptcy protection.
As one of the nation’s largest lenders to the retail industry, some economists say the company’s collapse could hurt a U.S. economy struggling to recover from recession.
Its customers range from Dunkin’ Donuts franchisees to department store operator Dillards Inc. It is also a short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation.
CIT Group’s losses have been mounting as its borrowing costs have outstripped its income amid the credit crunch. It received $2.3 billion in federal bailout money last fall and a $3 billion emergency loan in July from some of its largest bondholders.
The Treasury Department would receive a 5.4 percent stake in CIT Group under the amended debt exchange offer, compared with a 2.4 percent stake under the original plan launched at the beginning of October.
Current common shareholders will own about 2.5 percent of CIT Group if the exchange offer is completed. The remainder of the company would be owned by bond holders participating in the new debt exchange.
CIT had $54.09 billion in outstanding long-term borrowings as of June 30, including $13.85 billion due by June 30, 2010.
Amid uncertainty at the company, Jeffrey Peek, CIT Group’s chairman and CEO, announced last week he would retire at the end of the year. Peek, 62, has worked at CIT Group since 2003.
Business
CIT still might face bankruptcy after debt swap
- Business
-
-
World workers express anger, gloom on May Day
In the United States, demonstrations, strikes and acts of civil disobedience were planned, including what could be the country's most high-profile Occupy rallies since the anti-Wall Street encampments came down in the fall.
- Pulaski’s First National Bank working with local schools
-
Business Spotlight: Pool business branches out to Limestone County
- Mark White earns marketing professional certificate
-
Business Spotlight: Sara Wood, MedWest Community Care
To find out more about business spotlights in The News Courier, contact Lora Scripps at 256-232-2720 ext. 104 or email lora@athensnews-courier.com.
-
BUSINESS SPOTLIGHT: Bojangles’ Famous Chicken n’ Biscuits
-
Farmers Federation offers scholarship to local students
The Limestone County Farmers Federation is once again offering a $1,000 scholarship with an option of renewal for up to four years to local students.
-
Kazek honored for columns in CNHI contest
“Her columns are a treat to read. She writes in a conversational, witty and entertaining way. She has fun with her columns and you know she is having a good time while writing them. The beneficiaries are her readers.”
-
Carter named Gas Person of the Year
Athens Gas Department Manager Steve Carter was recently named the Gas Person of the Year.
-
GE to hire 5,000 veterans over next 5 years
General Electric Co. plans to hire 5,000 veterans over the next five years and invest $580 million to expand its aviation business.
- More Business Headlines
-
World workers express anger, gloom on May Day
Defense Rests in John Edwards Trial
GM Says It Will Stop Paying for Ads on Facebook
911 Call: Confusion at Home Where Mom Shot Kids
Jury Convicts Steve Powell of Voyeurism Charges
Skechers to Pay $40 Million for Bogus Claims
Coffee May Be Key to Living Longer
Police to Groom of Slain Bride: Turn Yourself In
Laurie Fine: My Life Has Been Destroyed
FTC: Skechers Deceived Consumers With Shoe Ads
FBI Confirms Leak Probe on Al-Qaida Plot
Romney Calls Obama a 'Disappointment'
Honda Unveils New Robotics-powered Scooter
NJ Gov., Mayor Channel Seinfeld in Video Parody
Blood Drive for Woman With Flesh-Eating Disease
AG Race Tops Oregon Primary Interest
Obama Welcomes Beckham, Galaxy to White House
Raw Video: Mladic's Genocide Trial Under Way
Court Records Detail Zimmerman Injuries
Local Community Prepares for G8 Summit
New Guidelines for US Nuclear Plants
